The push to bring U.S. regulatory rules in line with onchain activity gained momentum. Hyperliquid Policy Center (HPC) and Phantom submitted a joint comment letter to the Commodity Futures Trading Commission, as detailed in the original report. The letter asks the agency to update its framework so that publishing onchain protocol software does not, by itself, trigger registration requirements.
The filing comes as decentralized exchange infrastructure faces regulatory uncertainty. Hyperliquid has become a leading derivatives venue built entirely on a self-custodial model. Phantom’s non-custodial wallet reaches millions of users across Solana, Ethereum, and Bitcoin.
Together, they represent a growing group of protocols that says the CFTC’s existing rules were written for custodial intermediaries: centralized order books, brokers, and clearinghouses. They were not written for code that users interact with directly. This push mirrors a broader legislative struggle in which traditional financial interests have tried to derail landmark crypto bills just days before Senate votes.
The Core Request: Software Publication as a Non-Registrable Act
The letter makes three specific demands. First, it asks the CFTC to clarify that publishing onchain protocol software does not require registration. Second, it seeks a clear path for regulated exchanges and clearinghouses to adopt onchain infrastructure without violating legacy rules.
Third, it asks the agency to codify the Phantom Technologies non-action letter into a formal rule. The 2024 non-action letter indicated that certain self-hosted wallet activities would not face enforcement. But because it remains agency guidance, it leaves builders facing uncertainty.
The legal argument is straightforward. Under current interpretations, a developer could be treated like a traditional market operator simply for deploying smart contracts that users control.
The HPC-Phantom letter argues that this comparison does not fit the self-custodial and transparent structure of onchain markets. Transactions settle onchain, assets remain in user wallets, and the software does not hold customer funds. They say those differences require a different regulatory approach.
Why the CFTC’s Framework Feels Outdated
The CFTC’s rulebook was largely designed when centralized exchanges and derivatives clearing organizations served as trusted intermediaries. They held customer margin and controlled trade execution.
Onchain protocols remove that intermediary. Yet the agency has not formally addressed whether writing and releasing code is itself a regulated activity. The uncertainty discourages development and forces projects to weigh legal exposure against innovation.
This is not only a philosophical debate. The uncertainty has practical consequences for the U.S. market.
Onchain derivatives platforms often restrict access from American IP addresses rather than risk a regulatory fight. That pushes liquidity and users offshore, which is presumably the opposite of what the CFTC wants. Other jurisdictions, including the EU, are moving ahead with MiCA-style frameworks that offer clearer guardrails.
That increases pressure on U.S. agencies to provide similar clarity. In recent weeks, tokenized real-world assets crossed $20 billion on-chain, as highlighted in a market update. The figure further highlights the need for rules that accommodate automated, smart-contract-driven settlement.
What This Means for Exchanges and Onchain Markets
If the CFTC formalizes the requested clarifications, it could create a clearer path for centralized exchanges such as CME or Coinbase Derivatives to integrate onchain components. Those exchanges could do so without triggering full registration of the software layers.
The letter explicitly calls for a framework that allows regulated entities to use distributed ledger technology for clearing and settlement. That would differ from the current approach, in which moves toward onchain infrastructure often meet regulatory caution.
A formal rule codifying the Phantom non-action letter would also give non-custodial wallet providers and protocol developers a baseline of legal certainty. It could speed up product launches and reduce reliance on case-by-case relief.
For developers, the distinction between publishing code and operating a market would become less legally uncertain.
The request does not address every issue. Questions remain about how liability applies when third parties modify software or use it to facilitate illicit activity.
Neither the letter nor current CFTC precedent provides a clear answer. That gap could extend the debate beyond this comment period. The underlying protocol activity shows why the issue matters now: developer engagement across top chains remains robust, as tracked in recent weekly metrics. The data reflects the pace of onchain infrastructure growth that regulators must address.
The Road Ahead
The letter arrives as the CFTC signals openness to updating its approach. The agency has previously brought enforcement actions against decentralized platforms. Those cases often involved allegations of unregistered derivatives trading, rather than the mere publication of code.
The HPC-Phantom submission seeks to draw a clear line between software publication and market operation. If accepted, that distinction would change enforcement priorities.
The next steps depend on how the CFTC evaluates the comment. The agency could propose a rulemaking or issue additional guidance.
Congressional action could also force the issue, although the legislative path remains tangled, as ongoing battles over crypto market structure bills show. For now, the industry is asking the agency to state in a durable form that writing code is not a crime.
